The CIA gathers industry insights through a quarterly business survey to advocate for our members’ interests with policy makers, regulators and other stakeholders.
The chemical and pharmaceutical industry is fundamental to modern society. With an immense variety of products, from vital medicines and foods, the construction of buildings, to transport and leisure, the industry truly does have an impact on virtually every aspect of our daily lives.
The Chemical Industries Association undertakes a quarterly business survey of member companies. The data collected, alongside official statistics from the Office for National Statistics, are presented back to members for further analysis. The business survey provides insight into current operating conditions, the pressures facing chemical manufacturers, and expectations for the period ahead.
Industry Performance
Business activity strengthened across several indicators in the second quarter of 2026, building on the momentum seen at the start of the year. A larger share of respondents reported increases in total sales, exports and production levels. As noted in the survey:
46% of respondents reported higher total sales
41% higher exports
32% higher production levels
Growth was driven primarily by international demand, with rest‑of‑world exports outperforming EU markets. New orders remained resilient, supporting expectations of continued activity into Q3. However, domestic sales softened, and EU exports declined, highlighting uneven performance across markets.
Employment remained under pressure. The survey shows: ”45% of respondents reporting lower staffing levels and only 3% reporting an increase.” Profit margins improved compared with Q1, but cost pressures continued to limit recovery.
Key indicators also show that improvements in activity were generally more moderate than the increases in input costs. Nearly three in five respondents reported raw material price increases of more than 5%, and almost half experienced energy cost increases above 5%. These pressures continued to outpace gains in sales and production.
Challenges and Outlook
Cost pressures remained the dominant challenge for businesses in Q2. Although slightly less intense than in Q1, the majority of respondents continued to face higher raw material, import, export and energy costs. The report highlights that “around two‑thirds of respondents continued to report higher raw material, import, export and energy costs.”
Energy costs remained the most significant concern, cited as the top challenge by 38% of respondents. Raw material costs also remained prominent, while weakening demand re‑entered the top three challenges, reflecting renewed caution around market conditions despite stronger activity.
Expectations for Q3 suggest moderation rather than acceleration. While new orders provide a source of optimism — “37% of respondents expect an increase” — businesses remain cautious about employment and investment, with expectations for staffing levels and capital expenditure remaining below the neutral threshold.
Medium‑term expectations are more positive. Over half of respondents anticipate higher sales, production and capacity utilisation over the next 12 months. However, confidence has not yet translated into expansion plans, with hiring and investment intentions remaining subdued. Cost pressures are expected to persist, with around 28% anticipating further increases in raw material, import, export and energy costs.
At the CIA we undertake a quarterly business survey of our membership to identify arising trends, gather consensus and evaluate industry feel regarding arising issues to communicate with government and the media on operating conditions for chemical manufacturers across the quarter. The data collected, and official data provided by the Office for National Statistics, is presented back to members for further analysis.
Activity across the chemical sector strengthened at the start of 2026, with new orders returning to growth and production levels showing early signs of stabilisation. EU exports improved and capacity utilisation firmed slightly, but overall conditions remained fragile. Total sales continued to soften, margins faced renewed pressure, and rising raw material, import and energy costs kept workloads cautious and recovery uneven.
